China signed and Iran on Sunday signed an agreement to extend the railway line in western Iran as part of China's plans to link its railway system to the Mediterranean Sea at a cost of US$2 billion. The line will go from Tehran to the town of Khosravi on the border with Iraq. It will pass through the Iranian cities of Arak, Hamedan and Kermanshah.

The Iranian government agreed to the project, believing it will reach Iraq and Syria and possibly Lebanon as part of a Middle Eastern Corridor.

This new railroad line will help the Central Asian States to have an access to the Iranian port of Chahbahar and will provide China a vital overland route to transport goods to Europe. The Chinese expect it will help reduce the cost of transporting goods to Europe by 5 or 6%.